UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

 

FORM 8-K

 

Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

 

December 14, 2007 (December 12, 2007)

Date of Report (Date of earliest event reported)

 

Arch Capital Group Ltd.

(Exact name of registrant as specified in its charter)

 

 

Wessex House, 45 Reid Street, Hamilton HM 12, Bermuda

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code:
(441) 278-9250

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o                          Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o                          Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o                          Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR.14d-2(b)

 

o                          Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR.13e-4(c))

 

 

ITEM 1.01    Entry into a Material Definitive Agreement.

 

On December 12, 2007, Arch Reinsurance Ltd. (“ARL”), a subsidiary of Arch Capital Group Ltd. (“ACGL”), as obligor, signed a Letter of Credit and Reimbursement Agreement (the “Agreement”) with Lloyds TSB Bank plc, as agent (“Lloyds TSB”), Lloyds TSB, ING Bank N.V., London Branch (“ING”), and Barclays Bank plc (“Barclays”), as original lenders (the “Lenders”), and Lloyds TSB as mandated lead arranger. The Agreement is attached hereto as Exhibits 10.1 to this Current Report and is incorporated herein by reference.

 

The Agreement provides for the issuance of letters of credit in an aggregate amount up to $150 million. The Agreement is a secured letter of credit facility, with fees payable to the Lenders based on outstanding commitments under the facility. The Agreement provides that ARL may request that the Lenders issue or renew letters of credit in U.S. Dollars, Pounds Sterling or Euros with an expiration date of up to four years from the date of issue during the period starting from the effective date in the Agreement and ending December 31, 2009.

 

The Agreement contains customary covenants which limit our ability to dispose of material assets, incur liens or indebtedness under certain circumstances. Most of these restrictions are subject to certain minimum thresholds and exceptions. The Agreement also contains certain affirmative covenants which provide, among other things, that ARL maintain certain financial strength ratings. In addition, the Agreement provides that the obligations of ARL may be accelerated upon the occurrence and continuation of certain events of default. Such events include (subject to certain materiality thresholds and grace periods) payment defaults, covenant defaults, failure by ACGL to maintain minimum levels of net worth and maximum leverage ratios, material inaccuracy of representations and warranties, bankruptcy and involuntary proceedings, cross-defaults under other agreements and other customary defaults.

 

Each of the Lenders is also a lender under a separate credit agreement, dated as of August 30, 2006 (the “Credit Agreement”), as amended by the First Amendment to the Credit Agreement, dated as of October 1, 2007 (“First Amendment”), by and among ACGL, various subsidiaries of ACGL designated as borrowers and the other lenders named therein. The Credit Agreement was filed as an exhibit to ACGL’s Current Report on Form 8-K and the First Amendment was filed as an exhibit to ACGL’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 31, 2006 and October 2, 2007, respectively.

 

ITEM 2.03    Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information in Item 1.01 of this Current Report is incorporated by reference.

 

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ITEM 9.01    Exhibits.

 

EXHIBIT NO.		DESCRIPTION
10.1		Letter of Credit and Reimbursement Agreement, dated as of December 12, 2007, by and among Arch Reinsurance Ltd., as obligor, Lloyds TSB Bank plc, as agent, Lloyds TSB Bank plc, ING Bank N.V., London Branch and Barclays Bank plc, as original lenders, and Lloyds TSB Bank plc, as mandated lead arranger

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned.

 

	ARCH CAPITAL GROUP LTD.
	By:	/s/ John D. Vollaro
Date: December 14, 2007		Name:  John D. Vollaro
		Title:	Executive Vice President, Chief Financial Officer and Treasurer

 

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EXHIBIT INDEX

EXHIBIT NO.		DESCRIPTION
10.1		Letter of Credit and Reimbursement Agreement, dated as of December 12, 2007, by and among Arch Reinsurance Ltd., as obligor, Lloyds TSB Bank plc, as agent, Lloyds TSB Bank plc, ING Bank N.V., London Branch and Barclays Bank plc, as original lenders, and Lloyds TSB Bank plc, as mandated lead arranger

 

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